Excessive profit margins in the UK energy market

ofgem17:36 Thursday 31st July 2014
BBC Radio Cambridgeshire

[C]HRIS MANN: Ofgem says energy companies will double the profit per customer over the next year versus last year, despite energy prices falling. Ofgem has revealed the forecast profit margins for the Big Six energy companies are expected to reach £106 per customer over the next twelve months. Well I got reaction earlier on from Ann Robinson. She’s the Director of Consumer Policy at uSwitch.com.
(TAPE)
ANN ROBINSON: It’s time now that they reduced their prices. The reason why they’re making so much money is wholesale prices have been pretty low now for two or three years. They’re going to be very low this coming winter, and very low the winter after that. And wholesale prices are about half of our bill. So it’s time to treat us fairly. When wholesale prices go up do they dash then to put their prices up. Now they’ve come down, and they’re still falling, it’s time that they reduced their prices.
CHRIS MANN: Apparently, according to Ofgem, the profits are equivalent to £106 per customer over the next twelve months. That’s the profit margin. What do you think it should be?
ANN ROBINSON: Well the energy companies have been trying to tell us that they make very little money out of us. But these figures prove that it’s wrong. I don’t know what is a reasonable price. What I do know is that if you look for example at supermarkets, they’re making an average of about 3%-4%. Some of these new discounters who are coming in are making even less. I don’t know. I don’t know what it is, but what I do know is that I think the energy companies right now are going to be making too much out of us over the next twelve months. And we won’t know what a fair price is until the Big Six start really competing for our business.
(LIVE)
CHRIS MANN: That’s Ann Robinson, who’s the Director of Consumer Policy at uSwitch.com.

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